Sunday, October 25, 2015

The Distinguishing Traits of Professional Traders

In order to become what we want in life and to achieve what we want to achieve, the quickest route has always been to model ourselves after those who have already achieved it. You will probably cut years from your learning curve if you study professional traders and learn their distinguishing traits. In other words, what makes them, them? Why are they so good at trading whilst most people struggle? To find out, we’ve compiled a list of some of the most important factors and traits that allow professional traders to consistently take money from the ‘herd’ of amateurs…Premeditated approach
I cannot say enough for having a premediated trading approach. Every trader gets stuck in a phase where they don’t think they need to premeditate their trading approach. In other words, they think they can just ‘run and gun’ and ‘later’ they will start premeditating everything more. Unfortunately, this is not the proper trading mindset, and ‘later’ never comes, because without premeditating your trades, it never can come.
Let me clarify; by premeditated approach, I mean that professional traders know what their trading strategy is before they enter and they have everything planned out. They know what their entry signals are and when they are present in the market, they know what their dollar risk per trade is, they know what their trade management technique is, and they know what their exit plan is.
Simply put, the human mind cannot function properly in the world of never-ending temptation that is the market, if there is no premeditation. When you approach the market without a premeditated strategy, you open yourself up to over-trading, risk too much, not taking profits, mismanaging trades, etc. The only way to tame your own mind in regards to trading, is to plan out what you’re going to do before you do it and try to stick to it.Sickening discipline
Just how do you stick to that premeditated approach? Professional traders know that discipline is the glue that allows you to stick (pun intended) to your trading approach. I am not talking about your everyday run-of-the-mill casual person’s discipline. I am talking ‘sickening’ discipline; the type that most people simply cannot achieve or maintain.
Professional traders understand that everything hinges on their ability to be disciplined. It’s what really does separate the ‘men from the boys’ in trading. You’ve got to be disciplined to continue to execute your trading edge just as you should, no matter what happens; win or loss. You’ve got to be disciplined to stick to your risk per trade and not crank it up or down just because your last trade was a winner or loser. You’ve got to be disciplined not to check your trades a thousand times a day, at night and in your sleep on your smart phone. All of the mistakes that amateurs make that cause them to lose money, are a result of lack of discipline. Professionals know this.
If you have an effective trading edge like my price action strategy, and you can remain disciplined with it over a large enough series of trades, eventually you will come out on top. Most people however, cannot do this, and that’s why most people fail at trading. To be in the 10% of successful traders, you’ve got to crawl outside of your ‘box’, outside of your comfort zone, you’ve got to dig deeper than the amateurs who continuously give their money back to the market. You’ve got to see the ‘forest for the trees’ and stick to your trading plan with a religious sickening discipline that most people simply cannot achieve.
If that sounds harsh, it’s supposed to. Remember, when you’re trading, you are operating freely in an arena of never-ending temptation to do yourself financial and mental harm. It takes this type of discipline to overcome this temptation and truly take advantage of the opportunities the market presents.Understanding the maths
Professional traders understand the math behind their trading success, and this is one big reason they are able to remain disciplined. As I discussed in my article on the key to lasting trading success, trading success is about thinking in probabilities, rather than certainties. Trading is a game of probabilities, and until you fully believe that and start thinking about trading in terms of probabilities, you will not find success.